McCarthy v. McQuade — 31 N.Y. Super. Ct. 387

Majority

p. 387

TIMOTHY McCARTHY, Plaintiff and Respondent, v. PETER McQUADE et al., Defendants and Appellants.

Headnote

Effect of section 5, title 2, chap. 7, part 2 R. S., with reference to the charge of the judge; and what uncontroverted facts will not, as matter of law, constitute an immediate delivery, &c:, under this section.

If the facts bearing on the question of Immediate delivery, followed by an actual and continued change of possessions, are uncontroverted, the judge should determine, as matter of law, whether there was such immediate delivery, &c., or not; if he determine there was, he should charge the jury that it devolved on the defendant to prove that the sale, &c., was fraudulent, and made with the intent to hinder, delay, or defraud creditors; it he determine there was not, then he should charge the jury that it devolved on the plaintiff to show to their satisfaction that the sale, &c., was made in good faith and without any intent to defraud, and if the plaintiff failed so to show to their satisfaction, that then they should find a verdict for the defendant. If the facts bearing on the question of immediate delivery, &c., are in dispute, then the question, as to whether there ’was such immediate delivery or not, should be submitted to the jury, with instruction that as they found on that question, so would the burden of proof on the question of fraud devolve; if in the negative, it would fall on the plaintiff to prove to them satisfaction that the sale, &c., was made in good faith and without any intent to defraud; and if he failed so to satisfy them, their verdict must be for the defendant; if in the affirmative, it would fall on the defendant to prove to their satisfaction that the sale, &c., was fraudulent, and made with the intent to hinder, delay, or defraud creditors; and if he failed so to prove, then the verdict must be for the plaintiff State of facts which in this case were held as matters of law insufficient to show an immediate delivery, &e.

Before Monell, Jones, and Fithian, JJ.

[Decided July 2, 1869.]

This case was tried before Mr. Justice Monell and a jury.

The action was to recover damages for the conversion of certain personal property. The defence was, that the alleged conversion consisted in the levying on the property under an execution issued on a judgment rendered against one Peter McCarthy, and that the property was either the property of Peter, or Peter had an interest therein liable to levy and sale on execution.

The plaintiff, Timothy McCarthy, and one Peter McCarthy were brothers. Prior to the 25th of September, 1867, Peter had

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been carrying on the liquor business at No. 385 Seventh avenue', and Timothy had been in the employ of Samuel W. Milbank, as carman, for three or four years, at weekly wages of eleven or twelve dollars, Milbank supplying the horse and cart. .Peter had been sued, and on the 25th of September, 1867, judgment was imminent. On that day Peter made a bill of -sale to Timothy of the stock, fixtures, goods, chattels, and merchandise belonging to him, and then in his store at 385 Seventh avenue, and also of the good-will of the business; he also assigned to Timothy the lease of the premises.

The consideration alleged to have been given for this bill of sale and assignment was $1,200, which, it is alleged, was paid by Timothy, giving his brother Peter $100 cash, and assuming a debt of $1,100, due from Peter to Milbank.

Timothy paid to Milbank $500 of this indebtedness in cash, and gave his note for the balance. Timothy claimed to have raised the $500 thus: In 1865, he says he loaned to one Thomas Keane, liquor dealer, the sum of $300, for which loan he took no acknowledgment. This $300 he called in, and borrowed from Keane $200 more- Keane had previously sold liquor to Peter, 'and when asked if he had been on friendly terms with Timothy, replied, “ Hothing more than coming in and out.”

Timothy testified that he made no examination as to the quality of the liquor in his brother’s store, nor any inquiry into his business prior to the purchase; he further says, there was not to exceed $200 worth of property on the premises when he purchased, consisting of ten gallons of gin, twelve gallons of spirits, four boxes of cigars, worth about $12, and furniture and shelving worth about $50. .

The Sheriff testified that on the 27th September he went to the premises to make a levy, and found there four barrels of Bourbon, three other barrels and some demijohns, and the other three barrels contained sherry wine, spirits, and gin.

There is no proof that any liquor had been brought into the premises between the time of the sale to Timothy, on the 25th, and the visit of the Sheriff, on the 27th September; but plaintiff

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testified that after he bought*out his brother he bought liquors from. Thomas Keane, and Thomas Keane swore that plaintiff bought of him gin, whiskey, and sherry, to be delivered on the 28th, and they were delivered on the 28th.

It Ayas shown that on the 25tli, after the execution of the bill of sale by Peter to Timothy, both brothers went up to the store, and Timothy hired one Shea, Avho had been bar-keeper for Peter, as his bar-keeper. Timothy left his brother Peter in the store from the 25th to the 30th. Timothy never put up his sign, but in a Aveek or ten days after the 25th changed the sign of P. McCarthy, which had been previously on the premises, by erasing the letter “ P.”

Plaintiff testified generally that Peter gave him possession on the 25th.

This was the condition of the evidence, when defendants’ counsel offered in evidence a letter written by Peter to defendants, dated September 26, 1867, which was objected to by the plaintiff’s counsel, and objection sustained.

In this state of the proof, defendants’ counsel asked the deputy sheriff what Peter McCarthy said at the time the levy was made, which question was objected to by plaintiff’s counsel, and objection sustained.

The Justice charged, among other things: “ The laAV in regard to fraudulent sales and transfers of property is simply this, that every sale of property which is not accompanied by an immediate delivery and folloAved by an actual and continued change of possession, is presumed to be fraudulent and void as to creditors, and is conclusive evidence of a- fraud, unless the jury is satisfied from the evidence that the sale was made in good faith, and without any intention to defraud, hinder, or delay creditors. Therefore this sale to the plaintiff, from Peter McCarthy, >vould be void if you shall find that it was made with intent to defraud the creditors of the latter. But it is necessary to go a step farther. Although the transfer may have been made by Peter McCarthy Avith intent to defraud his creditors, yet, unless Timothy McCarthy Avas cognizant of sneh intention,

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it would not avoid the sale. A purchase made without any knowledge of any fraudulent intent on. the part of the vendor is protected. So that even if you shall find that Peter McCarthy did transfer this property with intent to defraud his creditors, yet if you shall also find that Timothy McCarthy did not know of, and was not a party to, the fraud, your verdict will be for the plaintiff.

“ The second branch of the case applies to the goods purchased by the plaintiff after the execution of the bill of sale, and for that property he is entitled to recover, although you shall find the bill of sale void, provided you shall also find that he purchased those goods in good faith for himself, and not for his brother Peter.

“ It is not important, except in one view of the case, whether the goods were purchased from Brewster or from Keane. But you have a right to look at the evidence of such purchase in connection with the question of fraud; and if you are satisfied that the plaintiff testified untruly that he made the purchase from Keane, when in fact it was made from Brewster, you have a right to discredit him in other particulars. It is claimed by the defence that there are several badges of fraud in the transaction, all of which you have a right to consider in examining the evidence' in the case. In the first place, there must be a sufficient consideration to, uphold the sale. You have a right to look at the value of the property transferred, and if you find that the consideration paid was grossly inadequate, or far exceeded the value of the property, it would be a fact proper for you. to consider on the question of the good or bad faith of the transaction. You have a right, also, to look at all or any of the acts of the parties—not the declarations of Peter, but any act of his in relation to the possession of the property. I excluded the declarations of Peter, after the execution of the bill of sale, but I allowed evidence of his acts in respect to the property as properly bearing upon the question of fraudulent intent. There is some evidence, I believe, that Peter was at the time the transfer 'of the property is claimed to have been made, in nos-

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session, and that he continued in possession for two or three days afterwards. The testimony upon that subject is proper for you to consider on the question of fraudulent intent on his part. In short, gentlemen, you have a right to take all the facts and circumstances of this case into consideration, for the purpose of satisfying yom* minds whether this was or was not a pretended sale. If you are satisfied it was a pretended sale, as respects all the property—that the goods purchased subsequently to the bill of sale were really purchased in the interest of Peter McCarthy, under cover of his brother’s name—then you will find a verdict for the defendants.

“ On the question of valuation, you have heard the testimony on both sides, and you will assess the value according to the best judgment you can form on all the evidence. If you find for the plaintiff, you will add interest from the 5th day of October.”

The defendants’ counsel requested the Court to charge:

First—That as matter of law the undisputed facts of this case show that, at the time of the levying, there had not been an immediate delivery followed by an actual and continued change of possession.

Second—That upon the undisputed facts of this case the plaintiff is required to prove the sale in question was in good faith, and without intent to defraud creditors, and if the plaintiff does not so prove, the verdict should be for the defendants.

The Judge refused to charge as requested, otherwise than as he had already charged. To which refusals exceptions were taken.

The jury rendered a verdict for plaintiff. Judgment was rendered thereon, from which the present appeal is taken.

Mr. Henry L. Clinton for appellants.

The Court .below erred in refusing to charge as matter of law that the undisputed facts in this case show that at the time of the levy there had not been an immediate delivery followed by an actual and continued change of possession. To this refusal defendants’ counsel excepted.

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The Court below erred in refusing .to charge, as requested by defendants, that, upon the facts of the case as appeared in evidence, the plaintiff was required to prove that the sale was made in good faith, and without intent to defraud creditors. To this refusal defendants excepted (Randall v. Parker, 3 Sand., 69).

Mr. Albert Mathews for respondent.

The Court correctly charged the jury that, although the vendor had a, fraudulent intent in making the sale, yet, if the plaintiff was a bona fide purchaser without notice of or privity to the fraud, the intent of the vendor alone would not vitiate tho plaintiff’s title (Dunham v. Waterman, 3 Duer R., 183; Griffen v. Marquand, 17 N. Y. R, 29; Carpenter v. Muren, 42 Barb. R., 303; 2 R. S., p. 137, sec. 6).

The evidence (if any existéd) tending to show a want of immediate delivery and change of possession, was properly submitted to the jury. The Court properly refused to charge, as matter of law, that the plaintiff was himself bound to show his purchase made in good faith, &e.

By the Court:

In the case of Randall v. Parker (3 Sandford), the sale was made by the son to the father; the son delivered possession by handing to him the keys of the premises; the father then went behind the bar, handed back the key to the son, and appointed him his agent to carry on the business. The son then took down the sign bearing the name of Theodore Randall, and put up another bearing the name of Randall only, and continued to carry on the business in the same manner as before.

The Court held that this evidence showed no such actual change as is contemplated by the statute; that the actual change meant by the statute is an open, visible, public change, manifested by such outward signs as render it evident that the possession of the owner, as such, has wholly ceased; that in the case at bar, the change was constructive and secret, not actual and apparent; that the goods'remained in the same house, in the same

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position, applied to the same uses, and, so far as the public had any means of judging, in the possession and under the control of the same person as owner; that the substitution of the sign bearing only the surname of “ Randall,” if intended not to deceive, but inform the public, was a pretence and mockery, and the delivery of the key, although symbolically a delivery of the goods, as between the parties, in respect to creditors, was an idle and unmeaning ceremony; and, therefore, held that the Judge, following the words and spirit of the statute, should have instructed the jury that they were bound to presume that the alleged sale, so far as it affected the rights of creditors, was fraudulent and void.

The evidence in this case at bar, as to an actual change of possession, is no stronger than that in the case of Randall v. Parker. There is no conflicting evidence concerning the facts bearing on this point. They are all conceded. It thus becomes a question of law whether they constitute an actual change or not.

The case of Randall v. Parker, therefore, governs this.

There being, then, no evidence of an actual change of posses sion, the jury should have been charged, as requested, that there was no such change, and should have been further charged, as requested, that the effect of no such change was to throw on the plaintiff the burden of proving that the sale in question was in good faith, and without intent to defraud creditors, and that, if the plaintiff failed so to prove, then the verdict should be for ,the defendant.

It remains to be seen whether the change as given - substantially covers the requests.

' Where there has been no actual change of possession under a sale, the statute throws on the vendee the burden of proving affirmatively good faith, and want of an intent to defraud (2 R. S., part 2, chap. 7, art. 2, sec. 5).

This, in eases like the present, changes the burden of proof as to these matters (there being no actual change of possession shown), from the defendants to the plaintiff. Instead of the defendants being required to prove affirmatively a fraudulent

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intent, the plaintiff is recpiired to prove the absence of fraud, and also to prove good faith in the transaction.

I think the charge of the learned Judge did not put'this base to the jury in this light. He charged them, “ This sale would be void if you shall find that it was made with intent to defraud creditors of Peter.” Again, “ There is some evidence, I believe, that Peter was, at the time the transfer of the property is claimed to have been made, in possession, and that he remained in possession two or three days afterwards. The testimony on that subject is proper for you to consider on the question of fraudulent intent on Ms part.”

The evident bearing of these portions of the charge is to put the case to the jury as if the burden of proof was on the defendant to prove a fraudulent intent, and to give to the evidence of no change of actual possession no other force that any other evidence bearing on a fraudulent intent would have.

These portions of the charge are not controlled or modified by any other expressions contained therein.

The charge, then, instead of covering the requests, is antagonistic thereto.

It may be said that the question as to whether there was an actual change was one for the jury to determine, and that consequently, as the requests called on the Judge to determine it, they were properly refused. H the plaintiff gives evidence tending to prove sufficient facts to constitute an actual change, and the defence introduces evidence contradictory thereof, then it becomes a question of fact for the jury to decide, under proper instructions from the Court upon the conflicting evidence, whether there has been such actual change or not. But when the facts are uncontroverted, then the question whether their effect is to constitute an actual change becomes a question of law for the Court (Randall v. Parker, supra), the same as, under similar circumstances, the question whether the effect of the facts is to constitute negligence becomes a question of law (Gonzales v H. R. R. R. Co., Court of Appeals).

The judgment shoiild be reversed for the error in refusing to charge as requested.